HP Inc. (HPQ) late Wednesday beat Wall Street's targets for fiscal third-quarter sales and earnings, but its stock dropped in after-hours trading on weak guidance.
HP stock was down 4.5% after hours, following the earnings news release. During the regular session Wednesday, HP dipped 1.2% to 14.40.
The Palo Alto, Calif.-based PC and printer maker earned 48 cents a share excluding items, up 37% year over year, on sales of $11.89 billion, down 4%, in the quarter ended July 31. Analysts polled by Thomson Reuters expected 44 cents EPS and $11.46 billion in sales.
For the current quarter, HP's fiscal Q4, the company guided to non-GAAP earnings per share of 34 to 37 cents. It did not give a revenue outlook. Wall Street had been modeling HP to earn 41 cents a share ex items on sales of $11.8 billion.
"While the July-quarter print is good (upside to sales and EPS), the much softer October quarter is driving the stock lower," RBC Capital Markets analyst Amit Daryanani said in a research note. It is "unclear what's leading to the downtick in EPS for October quarter but the concern would be it's printing driven, given PC results were actually positive."
Personal computers accounted for 63% of HP's revenue in Q3, with printing making up the remaining 37%.
But HP's printing business brought in 73% of profits in Q3, compared with 27% for the PC business.
"Although the markets remain challenged, we have the innovation and executional rigor needed to continue to take profitable share and invest in the right opportunities to drive long-term success for the company," HP CEO Dion Weisler said in a statement.
Excluding foreign-exchange impact, HP's revenue was down 1% in constant currency in fiscal Q3.
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It was HP's third quarterly report since it split from Hewlett-Packard. The rest of the original company became Hewlett Packard Enterprise (HPE).
HP is the global market share leader in computer printers and is a close No. 2 behind Lenovo in personal computers. But printers and PCs are in secular decline as the rise of mobile devices has reduced the need for both categories.
HP is broadening its reach into corporate copying-and-printing systems as well as 3D printers. In PCs, it is innovating with premium machines for gamers and power users, including the Omen gaming desktop and Spectre laptop.
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